Changing federal student aid

A student fills out an application for a chance to win one of 30 scholarships worth $30,000 which will be given out on as she takes part in Cash for College, a college and career convention, at the Los Angeles Convention Center on Dec. 8, 2010 in Los Angeles, Calif.

Jeremy Hobson: Today a House Committee will be looking at how the student loan business is faring following big legislative changes last year. Student loan debt is expected to hit $1 trillion this year and the biggest provider, by far,
is the federal government.

Amy Scott has more now from the Marketplace education desk at WYPR in Baltimore.

Amy Scott: As part of last year's student aid reforms, private banks can no longer offer federal student loans. They used to get big subsidies for doing so. Now the federal government makes all the loans directly.

Christine Lindstrom with the U.S. Public Interest Research Group says the bulk of the savings went to shore up the Pell Grant program for low-income students.

Christine Lindstrom: Things are so much better in the college affordability world now that we have that money actually going to students.

There have been some complaints, though. Justin Draeger with the National Association of Student Financial Aid Administrators says overall, the transition has been successful. But he says some schools miss the financial literacy and debt counseling programs private companies used to provide.

Justin Draeger: We're working with the Department of Education right now to fill that gap, but schools have said that there's a noticeable absence of some of those materials that they relied heavily on in the past.

Materials that may be more important than ever, with student loan defaults on the rise.